Austevoll Seafood ASA

Transcription

1 Austevoll Seafood ASA Financial report Q2 and H1 2016

2 INDEX key figures for the group Q Operating segments Cash Flows, Q Financial information, H Cash Flow, H Balance sheet at 30 June Risks and uncertainties Shareholders Market and outlook Income Statement Condensed Statement of Comprehensive income Statement of Financial Position Condensed Statement of changes in equity Cash flow statement Note 1 Accounting policies Note 2 Related party transactions Note 3 Biological assets Note 4 Operating segments Note 5 Associates Note 6 Issue of shares in Lerøy Seafood Group ASA Note 7 List of the 20 biggest shareholders Note 8 Information about acquisition in progress Responsibility Statement Austevoll Seafood ASA Alfabygget N-5392 Storebø NORWAY

3 FINANCIAL REPORT Q2 AND H Best quarter in the Group s history Good contribution from fish farming Late start-up of the first fishing season for anchoveta in Peru meant difficult fishing conditions Seasonally lower activity within pelagic in Europe Lerøy Seafood Group ASA (LSG) entered into an agreement in June to acquire 64.4% of Havfisk ASA and 73.6% of Norway Seafoods Group AS In June, LSG carried out a private placement of 5 million new shares at a price of NOK per share AUSS paid a dividend of NOK 7.00 per share on 3 June 2016, in total NOK 1.4 billion KEY FIGURES FOR THE GROUP All figures in NOK 1,000 Q Q H H Operating revenue EBITDA EBITDA % 22 % 19 % 21 % 17 % 15 % EBIT Pre tax profit Earnings per share (EPS) from continuing operations Total assets Equity Equity ratio 57 % 52 % 57 % 52 % 53 % Net interest bearing debt (NIBD)/ Financial report Q2 and H Austevoll Seafood ASA 03

4 Q Group operating revenue in Q totalled NOK 4,558 million, compared with NOK 4,108 million in Q Compared with the same period in 2015, there has been an increase in revenue in Atlantic salmon/trout and a decline in revenue in the pelagic segment. This can mainly be attributed to the late start-up of the first fishing season in Peru and, as a result, restricted sales of finished products from this season compared with last year. EBITDA in Q2 was NOK 985 million, up from NOK 778 million in the same quarter of The increase in EBITDA came within the Atlantic salmon/trout operating segment. There has been a decline in total EBITDA from the pelagic segment in Q compared with the same quarter of 2015, mainly because of the late start-up of the fishing season in Peru. EBIT before fair value adjustment of biomass in Q was NOK 790 million (Q2 2015: NOK 605 million). EBIT after fair value adjustment of biomass in Q was NOK 639 million (Q2 2015: NOK 380 million). The IFRS biomass adjustment for the quarter was negative at NOK 150 million (Q2 2015: NOK -225 million). Income from associates for Q totalled NOK 69 million (Q2 2015: NOK 46 million). The largest associates are Norskott Havbruk AS (owner of the Scotland-based fish farming company Scottish Sea Farms Ltd.) and Pelagia AS. The Group s net interest expense in Q totalled NOK 58 million (Q2 2015: NOK 60 million). Profit before tax and IFRS biomass adjustment for Q amounted to NOK 810 million, compared with NOK 586 million in Q Profit before tax for the quarter totalled NOK 659 million (Q2 2015: NOK 353 million). Profit after tax was NOK 504 million (Q2 2015: NOK 231 million). The Group is financially sound with an equity ratio of 57%. The Group had net interest-bearing debt totalling NOK 1,911 million at 30 June 2016, compared with NOK 4,560 million at the same time last year. Net interest-bearing debt at the end of Q was impacted by Lerøy Seafood Group ASA (LSG) carrying out a private placement in June worth a total of NOK 2,075 million. A total of 5 million new LSG shares were issued at a price of NOK per share. The proceeds from the share issue will be used to part-finance the acquisitions of 64.4% of Havfisk ASA and 73.6% of Norway Seafoods Group AS announced by LSG. OPERATING SEGMENTS Austral Group S.A.A (Peru) Austral Group S.A.A. (Austral) is involved in fishing, production of fishmeal and oil, and consumer products. Austral holds 6.87% of the total quota for anchoveta in Central/North Peru, and just under 4% of the quota in South Peru. In addition, the company has fishing rights for horse mackerel and mackerel. Anchoveta is used to produce fishmeal and oil, while horse mackerel/mackerel is fished for consumer products. The main fishing seasons for anchoveta in Central/North Peru run from April to July and November to January. Following restructuring, fishmeal and oil are now produced in four factories, located in Coishco, Chancay, Pisco and Ilo. The company also has two factories producing consumer products that share premises with the fishmeal and oil factories in Coishco and Pisco. The first fishing season for anchoveta in Central/North Peru started on 18 June, and the total quota for the season was set at 1,800,000 tonnes. The late start-up to the season meant that fishing was taking place in a period normally characterised by poor weather (winter), which among other things meant that some ports were closed for periods. Moreover, the fishing overlapped to some extent with the fish spawning. As a result of this, the first season finished as early as 27 July. The late start-up of the season meant that only a limited part of the quota was fished. At the end of the season, the company had fished approx. 55% of its total quota. For the industry as a whole, approx. 50% of the quota had been fished by the end of the season. The company has experienced low sales volumes in the quarter. As communicated in previous reporting, the company entered the second quarter with extremely low volumes in stock. Combined with the late start-up of the first fishing season of 2016, this also meant that extremely low volumes of fishmeal and oil from the current season were sold in the quarter. In Q2 2016, operating revenue was NOK 55 million (Q2 2015: NOK 534 million) and EBITDA was NOK -28 million (Q2 2015: NOK 242 million). Peru is one of the largest producers of fishmeal and oil in the world. Production volumes in Peru normally have a direct 04 Austevoll Seafood ASA Financial report Q2 and H1 2016

5 influence on the prices for fishmeal worldwide. Over the last two years, Peru has struggled with low quotas and difficult operating conditions. Foodcorp Chile S.A (Chile) Foodcorp Chile S.A (FC) is involved in fishing, consumer products, and production of fishmeal and oil. FC has a quota of 9.1% for horse mackerel in South Chile in addition to a quota for sardine/anchoveta. All FC s facilities share the same premises in Coronel. The main season for horse mackerel fishing runs from December to July. The main season for sardine/anchoveta fishing is divided into two periods. The first season starts in March and ends in July/August. The second season normally starts in October/November. At the end of the second quarter, the company had fished almost its entire quota for horse mackerel. The coastal fleet has had a difficult season, something that has also affected the availability of raw materials in the quarter under review. The company has, however, had good access to squid, which has become an important raw material source for the company in a period of limited access to horse mackerel. Some of the main markets for frozen horse mackerel continue to be affected by currency restrictions, which has a negative impact on the company s margins and increases funds tied up in finished product stocks. Market conditions for the remaining products squid, fishmeal and oil are good. Operating revenue in Q totalled NOK 151 million (Q2 2015: NOK 133 million) and EBITDA amounted to NOK 22 million (Q2 2015: NOK 40 million). There has been a marked decline in fishing for horse mackerel in Chile since 2008/2009. International fish stock management was introduced in 2012, along with the first total quota. Responsibility for the scheme is assigned to the South Pacific Regional Fisheries Management Organization. The quotas established in subsequent years have seen only a minor increase, in order to build up the biomass. We consider that the current practice of conservative management lays the foundations for a sustainable biomass in the long term and, consequently, increased activities for the Group s business in Chile. Lerøy Seafood Group ASA (LSG) In Q2 2016, LSG reported operating revenue of NOK 4,262 million (Q2 2015: NOK 3,352 million) and EBITDA before fair value adjustment of biomass of NOK 876 million (Q2 2015: NOK 470 million). The company has harvested 41,132 tonnes gutted weight of salmon and trout in the quarter, compared with 40,295 tonnes in the same quarter of 2015, representing a 2% increase in harvesting volume. Historically high realised prices are the key driver for profit in Q The spot price for salmon in Q was NOK 63.50, up NOK 5.40 per kg compared with Q1 2016, and up by 70% compared with the same quarter in Prices realised by the company in Q were negatively affected by a 31% contract share (salmon and trout), and by 25% of the company s harvested volume in the quarter being trout. Prices realised for trout remain lower than those for salmon, with prices realised for trout in the quarter more than NOK 5.00 lower than the company achieved for salmon. Russia s ban on imports of Norwegian salmon and trout, introduced on 7 August 2014, led to a significant increase in exports to the main European markets through most of For 2015, salmon prices measured in Euros were marginally down, while the weak Norwegian krone resulted in a price increase measured in Norwegian krone. Towards the end of 2015, the growth in supply to the main markets came to a halt, and in Q there has been a decline in available volume in the global salmon market. This, together with a high willingness to pay in the end market and the weak Norwegian krone, resulted in record-high prices for salmon in the quarter. Prices for trout also increased significantly in Q2 2016, though remain considerably below those for salmon. Release from stock costs were significantly higher in Q than Q2 2015, with higher feed costs the key driver. To optimise prices realised and reduce risk, in Q the company harvested fish of lower average weight than those harvested in both Q and Q In addition, the company continues to suffer from the extremely high direct and indirect costs involved in complying with statutory limits for salmon lice. The company believes there is potential for considerable cost reduction from the current level and, as previously communicated, has implemented a number of measures intended to reduce production costs for salmon and trout. In that respect, it is pleasing to report that the number of treatments was significantly down in the first half of 2016 compared with the first half of 2015, and treatments in the second quarter were largely mechanical. A challenging situation in parts of Central Norway in the second half of 2015 also negatively affected the cost level in Q This, together with the company s decision to harvest Financial report Q2 and H Austevoll Seafood ASA 05

6 earlier, and at lower average weights, has resulted in a cost level in Central Norway that the company considers to be higher than normal. As of today s date, release from stock costs in Central Norway are expected to be lower in the second half of 2016 than in the first half. Release from stock costs for Lerøy Sjøtroll in Q remain extremely high, but slightly lower than in Q However, the positive development in production has continued, and costs in the coming quarters are now expected to fall as new generations start to be released. LSG has a total of 146 licences: 26 in Troms, 57 in Central Norway and 63 in West Norway. LSG has made significant investments in increased capacity for high-value processing (VAP) of salmon and trout in recent years, and LSG s marketing work, together with good national and international customers, has improved capacity utilisation. The company s strategy has included making significant investments in processing facilities, in order to be part of the revolution in the distribution of fresh seafood. These investments involve what are known as fish-cuts : processing facilities where freshness, service and proximity to the customer are key. Today, LSG has a number of fish-cut facilities across Europe. On 2 June 2016, LSG entered into an agreement to acquire 64.4% of the shares in Havfisk ASA and 73.6% of the shares in Norway Seafoods Group AS. The acquisitions are subject to the approval of the Norwegian Ministry of Trade, Industry and Fisheries and the relevant competition authorities. The completion date for the transactions will depend on when the necessary regulatory approvals are in place. Completion will trigger a mandatory offer of NOK per share for the outstanding shares in Havfisk ASA. LSG also intends to make a voluntary offer of NOK 1.00 per share for the remaining outstanding shares in Norway Seafoods Group AS. The total consideration for 100% of the shares in the two companies in that case will be NOK 3.2 billion. The Board of Directors is pleased that LSG has entered into an agreement to acquire the shares in question. The acquisition is in line with the Group s strategy and consolidates the Group s position as a fully integrated supplier of seafood. Br. Birkeland AS (BRBI) BRBI owns two combined pelagic ring net/trawling vessels, each with 650 basic tonnes for ring nets and 1,425 trawling quota for blue whiting. In addition, the company owns a ring net vessel with 471 basic tonnes. In 2015, the company invested in a vessel to fish for snow crab. In addition, BRBI owns seven licences for farming Atlantic salmon/trout in Hordaland. In Q2 2016, the BRBI segment reported operating revenue of NOK 210 million (Q2 2015: NOK 141 million) and EBITDA before fair value adjustment of biomass of NOK 105 million (Q2 2015: NOK 21 million). As usual, the ring net vessels have had a low level of activity in the second quarter, but have fished parts of their North Sea herring quota. 2,341 tonnes of salmon and trout were harvested in Q2 2016, compared with 2,374 tonnes in Q Very good prices for salmon were realised in the quarter. The snow crab-fishing vessel had a productive quarter, and there is good demand for its products. Pelagia AS In accordance with IFRS 11, AUSS s consolidated financial statements report the joint venture Pelagia AS as an associate. In the notes to the financial statements for this segment (Note 4) and in the description of the segment in the present report, the financial information comprises 50% of Pelagia AS s total revenue, EBITDA, EBIT and sales volume. This corresponds to AUSS s ownership interest in Pelagia AS. Revenue for the quarter was NOK 533 million (Q2 2015: NOK 647 million) and EBITDA was NOK 60 million (Q2 2015: NOK 79 million). Activity is normally lower in the second quarter than the first and, within consumer products, it is mainly North Sea herring that is sold. Total receipt of raw materials in the Group (100%) for fishmeal/fpc and oil production was approx. 211,000 tonnes for the quarter, compared with approx. 311,000 tonnes in the same quarter of The volume of raw materials received for consumer products was 51,000 tonnes, compared with 46,000 tonnes in CASH FLOWS, Q Cash flow from operating activities for Q was NOK 1,032 million (Q2 2015: NOK 295 million). Cash flow from investing activities for Q was NOK 22 million (Q2 2015: NOK -196 million). Cash flow from investing activities in Q was affected by LSG selling 300,000 treasury shares in June, with total proceeds of NOK million. In addition, the Group has received dividends from associates totalling NOK 227 million. Cash flow from financing activities for Q was NOK 164 million (Q2 2015: NOK -21 million). Cash flow from financing activities in Q was affected by LSG carrying out a private placement in June. A total of 5 million new LSG shares were issued 06 Austevoll Seafood ASA Financial report Q2 and H1 2016

7 at a price of NOK per share, in total NOK 2,075 million. In addition, the Group paid dividends of NOK 1,695 million in Q2 2016, compared with NOK 684 million in Q Apart from this, cash flow from financing activities mainly comprises payment of ordinary instalments and changes in short-term credits. Net change in cash for the Group in Q was NOK 1,219 million (Q2 2015: NOK 77 million). The Group s cash and cash equivalents at the end of Q totalled NOK 4,979 million, compared with NOK 2,218 million at the end of Q FINANCIAL INFORMATION, H The Group reported operating revenue of NOK 8,970 million for H (H1 2015: NOK 7,654 million). EBITDA before fair value adjustment for biomass in H was NOK 1,871 million (H1 2015: NOK 1,295 million). The increase in turnover has been generated by activities within salmon and trout. The increase in EBITDA can also be attributed to the salmon and trout segment, and is mainly a result of very good prices realised for Atlantic salmon. EBIT before fair value adjustment for biomass in H was NOK 1,486 million (H1 2015: NOK 954 million). The IFRS biomass adjustment in H was positive at NOK 14 million. The corresponding IFRS biomass adjustment for the same period in 2015 was negative at NOK 593 million. EBIT after fair value adjustment of biomass in H was NOK 1,499 million (H1 2015: NOK 360 million). Income from associates for H totalled NOK 165 million (H1 2015: NOK 102 million). The Group s net interest expense in H totalled NOK -119 million (H1 2015: NOK -112 million). Profit before tax and biomass adjustment for H was NOK 1,534 million, compared with NOK 900 million in H Profit after tax for H was NOK 1,197 million (H1 2015: NOK 205 million). CASH FLOW, H Cash flow from operating activities for H was NOK 1,822 million (H1 2015: NOK 719 million). Tax payments in H totalled NOK 217 million (H1 2015: NOK 379 million). Cash flow from investing activities for H was NOK 828 million (H1 2015: NOK -493 million). The positive cash flow in H came from AUSS s sale of LSG shares in the first quarter and LSG s sale of treasury shares in the second quarter. Cash flow from financing activities for H was NOK -138 million (H1 2015: NOK -211 million). Cash flow from financing activities was impacted by LSG carrying out a private placement in June, in which a total of 5 million new shares in LSG were issued at a price of NOK per share. The Group paid dividends of NOK 1,695 million in H1 2016, compared with NOK 684 million in the same period in Net change in cash for the Group in H was NOK 2,512 million (H1 2015: NOK 15 million). The Group s cash and cash equivalents at 30 June 2016 totalled NOK 4,979 million, compared with NOK 2,218 million at 30 June BALANCE SHEET AT 30 JUNE 2016 The Group had a balance sheet total at 30 June 2016 of NOK 28,039 million, compared with NOK 23,246 million at 30 June The Group is financially sound, with book equity at 30 June 2016 of NOK 16,005 million, equivalent to an equity ratio of 57%. At 30 June 2015, the Group had book equity of NOK 12,132 million, equivalent to an equity ratio of 52%. Net interest-bearing debt was NOK 1,911 million at 30 June 2016, compared with NOK 4,560 million at 30 June The parent company is financially sound, with book equity of NOK 4,107 million (NOK 4,211 million) and net interestbearing debt of NOK 480 million (NOK 671 million) at 30 June The company has good access to external financing on competitive terms. RISKS AND UNCERTAINTIES The Group s risk exposure is described in the Annual Report The Group s activities are essentially global and will always be impacted to some degree by developments in the global economy. In light of the turmoil in the global economy in recent years, including trade barriers and geopolitical risk, the general consensus is that macroeconomic uncertainty is still greater than normal. Although this situation may have negative effects on the real economy in most markets, we are confident that AUSS s core activities are founded on long-term sustainable assets within interesting segments of the global seafood industry. The Group is exposed to risk related to the value of the Group s assets. Risk arises mainly as a result of changes in the prices of raw materials and finished products, to the extent that these changes impact the company s competitiveness and earnings potential over time. Operational factors, such as marine biomass, fishing conditions and price trends for the Group s input factors, are other key parameters that have an impact on risk for the Group. Financial report Q2 and H Austevoll Seafood ASA 07

8 Changes in fishing patterns and quota adjustments mean fluctuations in catch volumes from quarter to quarter and year to year, and hence in utilisation of the Group s production facilities. The seasonal fluctuations in catch volumes cause similar fluctuations in the quarterly key figures. The majority of the Group s debt is at floating interest rates, but fixed-rate contracts have been entered into for approx. 16% of the Group s interest-bearing debt. The Group is exposed to fluctuations in foreign exchange rates, particularly the EUR, GBP, USD, Chilean peso and Peruvian sol. Measures to reduce this risk include forward contracts and multi-currency overdraft facilities. Furthermore, parts of the long-term debt are adjusted in relation to earnings in the same currency. SHAREHOLDERS The company had 5,028 shareholders at 30 June 2016, compared with 4,913 at the start of the period. The closing price of the share was NOK at the start of Q and NOK at the end. A list of the 20 largest shareholders can be found in Note 7. The dividend of NOK 7.00 per share approved at the company s annual general meeting on 25 May 2016 was paid on 3 June 2016, in total NOK 1,419 million. This was higher than the company s dividend policy provides for and must be seen in the context of the wish for shareholders to benefit from the value generated in recent years, including by means of an extraordinary direct return. MARKET AND OUTLOOK Fishmeal and oil In Europe, the second quarter is the low season for both production and sales. However, production has also been lower in Europe in the first half of the year compared with the same period last year, due to a decline in quotas for important fish species normally used for production of fishmeal and oil. The third quarter is high season in market terms, because of sales to fish feed producers. Price trends for fishmeal in Europe have been stable to rising in The quota set for the first fishing season for anchoveta in Peru was 1.8 million tonnes. The season started unusually late this year, on 18 June, and finished on 27 July, at which point approx. 50% of the total quota had been fished. Price trends for fishmeal initially fell after the fishing quota for Peru was announced, but there was a rising trend through the season. Realised prices for fishmeal FOB Peru (super prime) are now USD 1,850, while the CIF Hamburg prices for fishmeal (standard 64%/65%) are USD 1,580. Consumer products The Group s production of consumer products takes place in Europe and South America. In Europe, the season for herring, mackerel and capelin is, as normal, in the period January to April, and the season for North Sea herring from May onwards. The first half of the year is the season for horse mackerel in South America. The ban on imports into Russia, introduced on 7 August 2014, and the subsequent introduction of import quotas and currency restrictions on sales to Nigeria have required the companies to actively seek alternative markets for those products traditionally sold mainly to Russia and Nigeria. The weak Norwegian krone has made Norwegian seafood products more competitive globally. However, we are also aware that the local currencies in some of our traditional herring markets (including Ukraine) are falling against the USD, resulting in higher prices for consumers in the markets concerned. Despite this, we are confident that the Group s products will fare well in competition with alternative sources of protein in these markets too. Production, sale and distribution of salmon and trout At the time of writing, there appear to be very limited opportunities for growth in the global supply of salmon and trout in the next few years. In light of the market prospects and the segment s potential for improvements in own production, the outlook is positive. The Group The Group is financially sound, has shown good development and currently has a strong position on a number of seafood markets worldwide. The Group s strategy going forward is to continue to grow and further develop within its current operating segments. The Group has and shall continue to have the financial flexibility to support its strategy of further organic growth, carry out strategic acquisitions and sustain the company s dividend policy. Given the prevailing framework conditions, the Board of Directors is essentially satisfied with the Group s results for Q The Group s strong position within the global seafood business gives grounds for a positive outlook for the Group s future development. The Board of Directors currently expects a better result in the second half of 2016 than the Group achieved in the second half of Austevoll Seafood ASA Financial report Q2 and H1 2016

9 Storebø, 17 August 2016 The Board of Directors of Austevoll Seafood ASA Chairman of the Board Deputy Chairman of the Board CEO Financial report Q2 and H Austevoll Seafood ASA 09

10 INCOME STATEMENT (unaudited) All figures in NOK Note Q Q H H Operating revenue Raw material and consumables used Salaries and personnel expenses Other operating expenses Operating profit before depreciation (EBITDA) Depreciation and amortisation Impairment EBIT before fair value biomass adjustment Fair value adjustment biomass Operating profit Income from associated companies Net interest expenses Net other financial items (incl. agio/disagio) Profit before tax Income tax expenses Net profit Profit to non-controlling interest Profit to controlling interests Earnings per share (EPS) Diluted EPS CONDENSED STATEMENT OF COMPREHENSIVE INCOME (unaudited) All figures in NOK Q Q H H Net earnings in the period Other comprehensive income Currency translation differences Other comprehensive income from associated companies - - Cash flow hedges Change in value available for sale financial assets - - Others incl. tax effect Total other comprehensive income Comprehensive income in the period Allocated to; Minority interests Majority interests Austevoll Seafood ASA Financial report Q2 and H1 2016

11 STATEMENT OF FINANCIAL POSITION (unaudited) All figures in NOK Note Assets Intangible assets Vessels Property, plant and equipment Investments in associated companies Investments in other shares Other long-term receivables Total non-current assets Inventories Accounts receivable Other current receivables Cash and cash equivalents Total current assets Total assets Equity and liabilities Share capital Own shares Share premium Retained earnings and other reserves Non-controlling interests Total equity Deferred tax liabilities Pensions and other obligations Borrowings Other long-term liabilities Total non-current liabilities Short term borrowings Overdraft facilities Account payable Other current liabilities Total current liabilities Total liabilities Total equity and liabilities NIBD Equity ratio 57 % 52 % 53 % CONDENSED STATEMENT OF CHANGES IN EQUITY (unaudited) All figures in NOK Equity period start Comprehensive income in the period Dividends Business combinations/acquisition Transactions with non-controlling interest Effect option programme Other Total changes in equity in the period Equity at period end Financial report Q2 and H Austevoll Seafood ASA 11

12 CASH FLOW STATEMENT (unaudited) All figures in NOK Q Q H H Cash flow from operating activities Profit before income taxes Fair value adjustment of biological assets Taxes paid in the period Depreciation and amortisation Impairments Associated companies - net Interest expense Interest income Change in inventories Change in receivables Change in payables Other operating cash flow incl currency exchange Net cash flow from operating activities Cash flow from investing activities Purchase of intangible and fixed assets Purchase of shares and equity investments Proceeds from sale of fixed assets/equity investments Cash inflow from business combinations Dividend received Interest income Other investing activities - net Net cash flow from investing activities Cash flow from financing activities Proceeds from new long term debt Repayment of long term debt Change in short term debt Interest paid Dividends paid Other finance cash flow - net Net cash flow from financing activities Net change in cash and cash equivalents Cash, and cash equivalents at start of period Exchange gains/losses (-) Cash and cash equivalents at period end Austevoll Seafood ASA Financial report Q2 and H1 2016

13 NOTE 1 ACCOUNTING POLICIES This interim report has been prepared in accordance with International Financial Reporting Standards (IFRS) and the related standard for interim financial reporting (IAS 34). The interim financial statements, including historical comparative amounts, are based on current IFRS standards and interpretations. Changes in the standards and interpretations may result in changes to results. The interim report has been prepared in accordance with the same policies applied to the most recent annual report, but does not contain all the information and notes required for an annual report. This report must therefore be read in the context of the company s most recent annual report (2015). NOTE 2 RELATED PARTY TRANSACTIONS There were related party transactions in Q Related party transactions take place on market terms, and the relevant types of transactions are described in detail in the Annual Report NOTE 3 BIOLOGICAL ASSETS The Group recognises and measures biological assets (fish in sea) at fair value. When estimating fair value, the price is adjusted for quality differences (superior, ordinary and process) and logistics costs. The volume is adjusted for gutting loss. Fair value of fish in sea with an average weight below 4 kg is adjusted based on the stage reached in the growth cycle. The value is not adjusted to a lower amount than historical cost, unless a loss is expected on future sales. For roe, fry, smolt and cleaner fish, historical cost is assumed to be the best estimate of fair value. The fair value adjustment for biomass recognised in the income statement includes change in unrealised gain/loss on financial sales and purchase contracts (derivatives) with Fish Pool, an international regulated marketplace for buying and selling financial salmon contracts. Fish Pool contracts are treated as financial instruments on the balance sheet, with unrealised gain recognised as other current receivables and unrealised loss as other current debt. Lerøy Seafood Group ASA Carrying amount of biological assets Fish in sea at historic cost FV adjustment fish in sea Fair value fish in sea Fry, brood, smolt and cleaning fish Carrying amount of biological assets Total biological assets at historic cost FV adjustment on biological assets Carrying amount of biological assets Fair value adjustment Q Q YTD 2016 YTD Change IFRS adj. biolocigal assets Change IFRS adj. derivatives FV adj. biological assets Volume of fish in sea (LWT) Q Q YTD 2016 YTD Volume at beginning of period Growht during the period Harvested volume during the period Volume at end of period Fish > 4kg The figures for harvested volume and growth in the table above have been estimated on the basis of gutted weight (GWT) and converted to live weight (LWT). The gutting loss ratios for salmon and trout applied in this conversion are 17% and 20% respectively. The table includes salmon and trout. Financial report Q2 and H Austevoll Seafood ASA 13

14 NOTE 3 BIOLOGICAL ASSETS (Continued) Br. Birkeland AS Carrying amount of biological assets Fish in sea at historic cost FV adjustment fish in sea Fair value fish in sea Fry, brood and smolt Carrying amount of biological assets Fair value adjustment Q Q H H Change IFRS adj. biolocigal assets Change IFRS adj. derivatives FV adj. biological assets Volume of fish in sea (LWT) Q Q H H Volume at beginning of period Growht during the period Harvested volume during the period Volume at end of period Fish > 4kg The figures for harvested volume and growth in the table above have been estimated on the basis of gutted weight (GWT) and converted to live weight (LWT). The gutting loss ratios for salmon and trout applied in this conversion are 17% and 20% respectively. NOTE 4 OPERATING SEGMENTS All figures in NOK Lerøy Seafood Group ASA Austral Group S.A.A Foodcorp Chile S.A Br. Birkeland AS Other/ eliminations Total Group Pelagia AS * (50 % of figures and volumes) Total Group incl. Pelagia AS (50 %) Q Operating revenue EBITDA EBITDA % 21 % -51 % 14 % 50 % 22 % 11 % 21 % EBIT ex. Impairment EBIT Volumes sold: Salmon (gwt tonnes) Fishmeal/oil/FPC (tonnes) Frozen fish (tonnes) Canning (cases) Q (restated) Operating revenue EBITDA EBITDA % 14 % 45 % 30 % 15 % 19 % 12 % 18 % EBIT ex. Impairment EBIT Volumes sold: Salmon (gwt tonnes) Fishmeal/oil/FPC (tonnes) Frozen fish (tonnes) Canning (cases) Austevoll Seafood ASA Financial report Q2 and H1 2016

15 NOTE 4 OPERATING SEGMENTS (continued) All figures in NOK Lerøy Seafood Group ASA Austral Group S.A.A Foodcorp Chile S.A Br. Birkeland AS Other/ eliminations Total Group Pelagia AS * (50 % of figures and volumes) Total Group incl. Pelagia AS (50 %) H Operating revenue EBITDA EBITDA % 19 % 10 % 16 % 49 % 21 % 11 % 20 % EBIT ex. Impairment EBIT Volumes sold: Salmon (gwt tonnes) Fishmeal/oil/FPC (tonnes) Frozen fish/fresh (tonnes) Canning (cases) H Operating revenue EBITDA EBITDA % 15 % 36 % 19 % 14 % 17 % 11 % 16 % EBIT ex. Impairment EBIT Volumes sold: Salmon (gwt tonnes) Fishmeal/oil/FPC (tonnes) Frozen fish/fresh (tonnes) Canning (cases) Operating revenue EBITDA EBITDA % 13 % 25 % 10 % 20 % 15 % 12 % 14 % EBIT ex. Impairment EBIT Volumes sold: Salmon (gwt tonnes) Fishmeal/oil/FPC (tonnes) Frozen fish/fresh (tonnes) Canning (cases) NOTE 5 ASSOCIATES Q Q H H Norskott Havbruk AS 50.0 % Pelagia AS 50.0 % Others Total income from ass.companies Total investment Financial report Q2 and H Austevoll Seafood ASA 15

16 NOTE 6 ISSUE OF SHARES IN LERØY SEAFOOD GROUP ASA In a private placement on 2 June, LSG issued 5 million new shares at a price of NOK per share. The total number of shares in LSG following the new issue is 59,577,368. AUSS owns 31,394,281 shares in LSG, equivalent to an ownership interest of 52.7%. NOTE 7 LIST OF THE 20 BIGGEST SHAREHOLDERS AT 30 JUNE 2016 Investor Number of shares % of top 20 % of total LACO A/S % % STATE STREET BANK & TRUST CO % 2.80 % STATE STREET BANK AND TRUST CO % 2.10 % PARETO AKSJE NORGE % 1.46 % FOLKETRYGDFONDET % 0.96 % OM HOLDING AS % 0.93 % MITSUI AND CO.. LTD % 0.88 % SKANDINAVISKA ENSKILDA BANKEN AB % 0.85 % BR.BIRKELAND AS % 0.85 % THE BANK OF NEW YORK MELLON % 0.80 % PACTUM AS % 0.79 % DANSKE INVEST NORSKE INSTIT. II % 0.77 % JP MORGAN BANK LUXEMBOURG S.A % 0.68 % MP PENSJON PK % 0.58 % JPMORGAN CHASE BANK. N.A.. LONDON % 0.55 % CITIBANK. N.A % 0.52 % JP MORGAN CHASE BANK. NA % 0.49 % STATE STREET BANK AND TRUST CO % 0.46 % PARETO AS % 0.45 % THE NORTHERN TRUST CO % 0.44 % Total number owned by top % 72.91% Total number of shares % 16 Austevoll Seafood ASA Financial report Q2 and H1 2016

17 NOTE 8 INFORMATION ABOUT ACQUISITION IN PROGRESS The 2nd of June 2016 Lerøy Seafood Group ASA (LSG) entered into an agreement with Aker Capital AS and Aker Capital II AS to purchase 53,501,793 shares in Havfisk ASA and 62,293,254 shares in Norway Seafoods Group AS. LSG has also agreed to purchase an additional 1,026,632 shares in Havfisk ASA from Fausken Invest AS. The purchases represent 64.4% and 73.6% of the total share capital in Havfisk ASA and Norway Seafoods Group AS respectively and comprise Aker Capital AS, Aker Capital II AS and Fausken Invest AS entire shareholdings in the companies. These purchases will significantly strengthen LSG`s position within the European white fish segment and secure access to more than 100,000 tonnes of white fish raw material. Through LSG s well-established integrated value chain for salmonids, there is a considerable potential to create value by further developing the market for white fish and by creating the leading fresh/refreshed seafood supplier with a complete palette of seafood products. LSG has agreed upon a purchase price of NOK per share of Havfisk ASA and NOK 1.00 per share of Norway Seafoods Group AS. The transaction agreement is subject to customary conditions and approvals. The purchase price for the shares shall be paid in cash after all necessary regulatory approvals are received. LSG is still awaiting approval from The Norwegian Ministry of Trade, Industry and Fisheries, and the relevant competition authorities before the transactions can be completed. The completion date of the transactions will be dependent on the necessary regulatory approvals. Completion of the purchase will trigger a mandatory offer for the remaining shares in Havfisk ASA at NOK per share. Provided completion of the transaction, LSG also intends to make an offer for the remaining shares in Norway Seafoods Group AS at NOK 1.00 per share. The total combined consideration for 100% of the shares in both companies will be NOK 3.2 billion. When the transactions are completed, LSG must remain majority owner in Havfisk ASA under existing exemptions from Norwegian regulations related to ownership of trawler licenses / catch quotas. As part of financing the acquisitions, LSG sold 300,000 own shares and contemplated a private placement of 5,000,000 new shares. The two transactions have raised NOK 2.2 billion in cash. Additional financing for the transaction is contemplated through new debt. Financial report Q2 and H Austevoll Seafood ASA 17

18 RESPONSIBILITY STATEMENT We declare that, to the best of our knowledge, the half-yearly accounts for the period 1 January to 30 June 2016 have been prepared in accordance with IAS 34 Interim reports, and that the information in the accounts provides a correct illustration of the Group s assets, liabilities, financial position and result as a whole. We also declare that, to the best of our knowledge, the half-yearly report provides a correct overview of significant events during the accounting period and their impact on the half-yearly accounts, the most central risk and uncertainty factors faced by the Group during the next accounting period and of significant transactions with closely related parties. Storebø, 17 August 2016 The Board of Directors of Austevoll Seafood ASA Chairman of the Board Deputy Chairman of the Board President and CEO 18 Austevoll Seafood ASA Financial report Q2 and H1 2016

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